The Oklahoma Independent Petroleum Association (OIPA) is challenging a recently filed constitutional amendment that would eliminate the state’s two-tiered gross production tax system, resulting in a 250 percent, potentially retroactive, tax increase on the state’s oil and natural gas industry.

The OIPA filed two challenges to State Question 795 Tuesday with the state Supreme Court.

“The two-tiered gross production tax that starts at 2 percent and moves to 7 percent after 36 months for all new wells in Oklahoma is a key driver in encouraging continued investment in Oklahoma’s oil and natural gas fields, and is the reason our state continues to see revenue higher than projections over the past several months,” OIPA President Tim Wigley said. “The oil and natural gas industry is Oklahoma’s defining industry and any tax increase, such as the proposed constitutional change, which will hamper investment and have a detrimental effect on the industry and the state economy as a whole is a bad idea.”

In its challenges, the OIPA argued that the “gist of the proposition” filed with the Secretary of State is unclear and includes biased language that could impact the decision of potential signators. The OIPA also challenged the state question’s language that would make the tax retroactive and maintains that the question, as written, violates the state constitution’s single-subject rule.

“Singling out one industry for a constitutionally enacted tax increase is not only unprecedented, it is bad public policy,” said OIPA Vice President of Regulatory Affairs A.J. Ferate, who also represents OIPA as an attorney on the filings. “By setting such a precedent, this state question could open the door to placing similar tax increases in the constitution on other Oklahoma industries like agriculture, manufacturing or aerospace.”

Founded in 1955, the OIPA is the state’s largest oil and gas advocacy group, representing more than 2,000 members in the crude oil and natural gas exploration/production industry or affiliated businesses.